TNAG-0254-FCO40-290-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 37

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From:

EH Gwynn CB

Our reference:DUS(F)153/1

Your reference:

aw ay

Dear Mopson,

S SECRET

MINISTRY OF defence

Main Building, Whitehall, LONDON S.W.I

Telephone: WHItehall 7022, ext. 6613

HONG KONG DEFENCE CONTRIBUTION

24th September 1970

:

K..

66

As promised in my letter of 15th September I now enclose the revised table of costs to go with the proposed; letter to the Governor of Hong Kong. I am sorry to say that the full budgetary cost of the IS element now comes out at nearly £M1 more than the £M10.2 which I mentioned at our meeting on 7th September. The reason for this is that the £M10.2 was a simple updating (allowing for the reduction in the number of Army units) of last year's figures to take account of pay and price increases. The new figure of £M11.13 is the result of a full recosting which also takes account of the fact that it has recently been found possible to bring up to strength the Army units in Hong Kong a development for which we did not allow a year ago.

2. I agree with the amendment to paragraph 3b. of the draft letter proposed in Goldsmith's letter of 17th September.

3. I agree with the suggestion in paragraph 2 of Gedling's letter of 21st September and suggest that the following should be added at the end of paragraph 2 of the draft letter to the Governor:

4.

"The main reasons for the increase in costs inspite of the reduction in the number of Army units are first, the increased cost of the new Service pay structure introduced last April and second, the fact that it has recently been found possible to bring the Army units in the Colony up to strength a development which was not allowed for last year.

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I am content with Gedling's revision of paragraphs 4 and 5 of the draft letter subject to two points on the revised paragraph 5.

OVO IN

3:51

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! AKKING

The paragraph seems to take it for granted that there is no possibility of contribution of more than £M8 to start with. Although this possibility may be remote we should be reluctant to exclude it. I therefore suggest that the opening phrase of the paragraph should be amended to read:

"The objective of any new agreement should be that the Colony will if not immediately. at least in due course, assume ...

,

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and that at the beginning of the 4th sentence, "The least" should be substituted for "What".

Sir Leslie Monson KCMG CB

Foreign and Commonwealth Office

SEGRET